Supply Side Economics

That's the situation
I've known it from the start
Every time that I look at you
I can't see the future
--Genesis

Interesting missive from the Hussman site that extends previous thoughts of optimistic earnings expectations.

One chart that I found particularly interesting was this one:

The strength of the relationship between the manufacturing Purchasing Managers Index (PMI) and earnings surprised me. The earnings numbers are shifted forward by six months to account for the lag between business conditions upstream in the supply chain (that's what the PMI is supposed to reflect) and downstream financial performance.

A number of smart cookies track PMI as a leading indicator. Can you see why?

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